The latest Purdue University/CME Group Ag Economy Barometer farmer sentiment index declined five points to a reading of 112 in September, said Purdue Agricultural Economist James Mintert, it a release.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey, the release said. This month’s survey was conducted from Sep. 19 through 23.
WEAKER VIEWS OF CURRENT CONDITIONS
The decline in farmer sentiment was primarily because producers’ weakened perception of current conditions, as the Current Conditions Index declined nine points to 109, the release said. The Index of Future Expectations also weakened slightly, declining three points from a month earlier to a reading of 113.
Concerns about input costs, and in some cases, availability are key factors behind the relative weakness in this month’s farmer sentiment with a growing number of producers expressing concern about the effect of rising interest rates on their farm operations, Mintert said.
INPUT COSTS RISING
Higher input costs remained the number one concern among survey respondents, he said. In September, 44% of respondents chose “higher input costs” as their number one concern, while 23% chose “rising interest rates,” and 14% chose “availability of inputs.”
When asked to look ahead to 2023, 38% of producers expected input prices to rise from 1% to 9%, compared with 2022 prices. Meanwhile, 24% expected input prices to rise from 10% to 19%, and 9% of survey respondents said they expected an input price rise of 20% or more.
CAPITAL INVESTMENT CONCERNS
The Farm Capital Investment Index declined to a record low of 31 in September, as producers continued to indicate now is not a “good time” to make large investments in their farming operations, the release said. For the third straight month, producers overwhelmingly (46%) said it was because of increasing prices for farm machinery and new construction.
However, 21% indicated that “rising interest rates” were a primary reason for feeling it was a bad time for farm improvements, up from 14% who cited interest rates in August, Mintert said. Despite the negative perspective, fewer producers planned to reduce their farm machinery purchases.
Since peaking in March at 62%, the share of producers who planned to reduce their machinery purchases compared with a year earlier had been declining, dipping to 47% in September, he said.
Their plans for farm building purchases told a similar story, Mintert said. Since the March high of 68%, producers who planned to reduce their building and grain bin purchases has fallen to 56% in September.
This month, the Short-Term Farmland Value Expectations Index fell five points to 123 and the Long-Term Farmland Value Expectations Index fell seven to 139.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $143.00 to $145.88 per cwt, compared with last week’s range of $142.00 to $147.86. FOB dressed steers, and heifers went for $224.47 to $227.94 per cwt, versus $222.00 to $227.67.
The USDA choice cutout Tuesday was up $2.10 per cwt at $248.04 while select was up $0.60 at $221.91. The choice/select spread widened to $26.13 from $24.63 with 77 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.95 to $2.05 a bushel over the Dec futures and for southwest Kansas were steady at $1.00 over Dec, which settled at $6.83, up $0.02 1/4.
The CME Feeder Cattle Index for the seven days ended Monday was $175.67 per cwt up $0.23. This compares with Tuesday’s Oct contract settlement of $174.65, down $0.87.